PennyMac Mortgage Investment Trust Stock

PennyMac Mortgage Investment Trust operates as a specialty finance company that invests primarily in mortgage-related assets.

The company conducts substantially all of its operations, and makes substantially all of its investments, through its subsidiary, PennyMac Operating Partnership, L.P. (Operating Partnership) and its subsidiaries. A wholly-owned subsidiary of the company's is the sole general partner, and it is the sole limited partner, of its Operating Partnership. Certain of the activities conducted or investments made by it and are conducted or made through a wholly-owned subsidiary that is a taxable REIT subsidiary (TRS) or through other subsidiaries of the company's Operating Partnership.

The management of its business and execution of the company's operations are performed on the company's behalf by subsidiaries of PennyMac Financial Services, Inc. (PFSI). PFSI is a specialty financial services firm separately listed on the New York Stock Exchange focused on the production and servicing of loans and the management of investments related to the U.S. mortgage market. Specifically:

The company is managed by PNMAC Capital Management, LLC (PCM), a wholly-owned subsidiary of PFSI and an investment adviser registered with the United States Securities and Exchange Commission (SEC) that specializes in, and focuses on, U.S. mortgage assets.

The company's loan production and servicing activities are performed on its behalf by another wholly-owned PFSI subsidiary, PennyMac Loan Services, LLC (PLS or Servicer).

The company's investment focus is on residential mortgage-backed securities (MBS) and mortgage-related assets that it creates through its correspondent production activities. Correspondent production activities include purchasing, pooling and selling newly originated prime credit quality residential loans (correspondent production). Through its correspondent production activities, the company creates and holds mortgage servicing rights ("MSRs"), non-Agency MBS, credit risk transfer (CRT) agreements (CRT Agreements), and other CRT securities (together, CRT arrangements).

Segments

The company operates through Credit Sensitive Strategies, Interest Rate Sensitive Strategies, and Correspondent Production segments.

The Credit Sensitive Strategies segment represents the company's investments in CRT arrangements, subordinate MBS, distressed loans and real estate.

The Interest Rate Sensitive Strategies segment represents the company's investments in MSRs, excess servicing spread (ESS) purchased from PFSI, Agency and senior non-Agency MBS and the related interest rate hedging activities.

The Correspondent Production segment represents the company's operations aimed at serving as an intermediary between lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality loans either directly or in the form of MBS, using the services of PCM and PLS.

The company primarily sells the loans it acquires through its correspondent production activities to government-sponsored entities (GSEs) such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation ("Freddie Mac") or to PLS for sale into securitizations guaranteed by the Government National Mortgage Association (Ginnie Mae). Fannie Mae, Freddie Mac and Ginnie Mae are each referred to as an Agency and, collectively, as the Agencies.

Competition

In the acquisition of mortgage assets, the company competes with specialty finance companies, private funds, thrifts, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, governmental bodies and other mortgage REITs, such as Chimera Investment Corporation, Invesco Mortgage Capital Inc., Rithm Capital Corp., MFA Financial, Inc., New York Mortgage Trust, Inc., Redwood Trust Inc. and Two Harbors Investment Corp., all of which may also be focused on acquiring mortgage-related assets, and therefore may increase competition for the available supply of mortgage assets suitable for purchase.

Compliance and Regulatory

The company's Servicer's servicing operations are licensed (or exempt or otherwise not required to be licensed) to service mortgage loans in all 50 states, the District of Columbia, Guam and the U.S. Virgin Islands. From time to time, the company or its Servicer receive requests from states and Agencies and various investors for records, documents and information regarding its policies, procedures and practices regarding its loan production and loan servicing business activities, and undergo periodic examinations by federal and state regulatory agencies.

The company must comply with a number of federal consumer protection laws, including, among others:

the Real Estate Settlement Procedures Act (RESPA), and Regulation X thereunder, which require certain disclosures to mortgagors regarding the costs of mortgage loans, the administration of tax and insurance escrows, the transferring of servicing of mortgage loans, the response to consumer complaints, and payments between lenders and vendors of certain settlement services;

the Truth in Lending Act (TILA), and Regulation Z thereunder, which require certain disclosures to mortgagors regarding the terms of their mortgage loans, notices of sale, assignments or transfers of ownership of mortgage loans, new servicing rules involving payment processing, and adjustable rate mortgage change notices and periodic statements;

the Equal Credit Opportunity Act and Regulation B thereunder, which prohibit discrimination on the basis of age, race and certain other characteristics, in the extension of credit;

the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics;

the Home Mortgage Disclosure Act and Regulation C thereunder, which require financial institutions to report certain public loan data;

the Homeowners Protection Act, which requires the cancellation of private mortgage insurance once certain equity levels are reached, sets disclosure and notification requirements, and requires the return of unearned premiums;

the Servicemembers Civil Relief Act, which provides, among other things, interest and foreclosure protections for service members on active duty;

the Gramm?Leach?Bliley Act and Regulation P thereunder, which require the company to maintain privacy with respect to certain consumer data in its possession and to periodically communicate with consumers on privacy matters;

the Fair Debt Collection Practices Act, which regulates the timing and content of debt collection communications;

the Fair Credit Reporting Act and Regulation V thereunder, which regulate the use and reporting of information related to the credit history of consumers; and

the National Flood Insurance Reform Act of 1994, which provides for lenders to require borrowers/owners of properties in special flood hazard areas to purchase flood insurance for such properties, or for lenders to purchase flood insurance on behalf of such borrowers/owners.

Tax Status

The company has elected to be treated as a real estate investment trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986 (the Internal Revenue Code) beginning with its taxable year ended December 31, 2009. The company generally needs to distribute at least 90% of its taxable income each year (subject to certain adjustments) to its shareholders to qualify as a REIT under the Internal Revenue Code.

History

PennyMac Mortgage Investment Trust was founded in in Maryland in 2009. The company was incorporated in 2009.